Retail Basics

Retailing policies, often arbitrarily setup, often amaze me. Here is another one of those. Health & Glow, as many of you know are aware, is a JV between Dairy Farm and Arko International with 65 stores in India operating from four metros. Dairy farm also runs similar health & beauty formats elsewhere in Asia under Guardian and Mannings brand names. It also owns and operates Foodworld in India.

Neatly carved out niche in the Indian market without any other format competitor to really talk about except Dabur’s NewU. But the typical Indian retailing bug has bitten these folk too. As you will see in the cell phone picture above, they don’t allow returns and exchanges. Given the fact that this is a cosmetics type convenient store, I do appreciate that they need to be wary of returns and exchanges especially because if their items get used, they can’t be put back on the shelf at all – as is, or refubrished.

But, there will be occasions where the product is defective, doesn’t work or there is a quality glitch. Completely beats me how can they not return or exchange in those cases. This can’t even be legal. Whatever said and done, customer service and retailing in the country are still distant cousins who have not yet met.

Like this:

National Retail Federation (in the US) is reporting that retailers lost a staggering $33.5Bn last year due to shrinkage. Shrinkage, as you are aware, is loss of inventory (and resulting revenue) which comes from theft in stores by employees, customers and vendors, administrative errors and in many cases even vendor fraud. Despite the staggering number, there is a bit to cheer about this time. Retailers take heart in the fact that shrinkage has actually fallen by 0.07% of overall sales in the last two years.

One would attribute the decrease to the industry’s ever alert mechanisms to prevent crime in the stores, in the warehouses or on the road. After all, theft happens due to available opportunity and as retailers keep themselves ahead of deviant minds the opportunities dwindle.

The largest components of shrinkage are shoplifting, and different types of fraud which happen in the stores. Shoplifting contributed to $11.7Bn, and employee theft contributed to $14.4Bn. The employees very often under ringing an item and then give the item to an associate or keep it themselves (phenomenon called “sweethearting”).The other very common mechanism is the return fraud wherein a used or never sold item is returned to the store. Of course, a used item, can hardly be put back on the shelf. Vendor fraud and operational errors and vendor fraud cost retailers $1.3Bn and $4.9Bn respectively.

Though shrinkage has dropped just that wee bit in the North America, there is no data to show a drop in India. Neither is there clear data to even show even how much shrinkage really happens across the industry. Our struggles, of course, are different and the tribulations vary.

Like this:

So here’s the second part of my post about Kaati Zone, and the advent of quick service restaurants in the country. My last post was more around what Kaati Zone is and where they are located, and what they serve and how new and innovative their assortment set is. This one will be slightly different 🙂

Kaati Zone - Church Street, Bangalore

Though I quite like what KZ offers, they still have some things to sort (not in any particular order):

1. Atmosphere /Ambience : KZ has two / three types of format. The sit down type (as in Church Street), or counter based in shared space. The latter would be in airports, or in food courts adjoining office complexes where KZ operates a counter and seating is common in the food court. My crib is about the former. I would consider their Church Street store to be their flagship store since it is in a very high visibility area.

The place is neat, clean and cold (as opposite to warm, as in emotion). As you walk by the place, there is nothing in the store that beckons you, or welcomes you. Hard tiled floors, plasticky decor and sometimes an individual behind the self service counter. Not enough!

I have never ever seen more than one table, besides mine, being occupied. Regardless of time that I have passed by or entered. And its brightly lit, so very visible. Doesn’t work well to attract people.

There are two TV screens which play the usual non-descript something or the other. More often than not, one of the screens is switched off. The music which plays is again rather non-descript western music. IMHO, The music , the type of expected clientele and the food do not go along together. How about just playing one of the multi-lingual FM channels?

Lighting (as I mentioned earlier) is bright, and white. Not enough warmth, there either.

2. Pinching the penny:

Example 1 – The packet in which the roll is served is hard paper, which you can sort of spiral tear as you eat the roll. Surely, it costs a bit to produce that packet. Though designed well, it does not tear well. Also, unless the food that you ordered is to go, one does not need this type of paper packaging. Branded butter paper (or something of that sort) would do very easily. The current packaging has parts of the menu written on it; wrong place. No one reads that. The package also mentions the duration required to re-heat in a microwave. Well, I can’t possibly stick paper into the microwave. That implies that the package is a waste even for a take away which is going to someone’s home (or at least to a place where re-heating is possible). How about a plastic tube, which can be heat sealed at the store? Just the packaging itself will save money.

Example 2 – The sides are served in boxes, which are way larger than the content would ever need. Designed almost for a largish burger really. Wasted, I thought. Have you seen those paper boat type things that fries are often served in many other fast food places? That is what is required here. Will save money, again!

3. Availability: In most cases, I eat at the KZ counter near where I work. And almost never have I been able to procure a lite or a diet paratha (as mentioned on the menu). That is a bit of a bummer! Though honestly, a lite paratha with something which is not really low calorie does not make that much sense anyways. Quite like the double cheese, large fries and the diet Coke!

I do honestly believe that KZ has a good offering, and I would love to take a franchise (if I had the money) and I can think of five different locations where it will do very well, but they need to set some things right.

The last post in the “Getting it right” series was on passing the promotions to the POS. This one is even more basic, and is on basic pricing!

How about getting the basic pricing right?

Here is another one for your amusement. This is at the bakery chain called The French Loaf. They have at least four stores in Bangalore, and may be a few more in other cities. There was a reference to Chennai in a conversation, so maybe a few there too.

We happened to pick a box of cookies (see picture) and asked for some coffee. The box, you will notice mentions that Rs 56 is the price of the item (including all taxes). So far so good. When we received the bill, it mentioned Rs 50 as the price of the item and a 12.5% VAT added. And therein lies the discrepancy. The price of the item (including tax) now was Rs 56.25. A minor difference of 25 paise, no doubt but a discrepancy all the same. Upon asking, the store manager mentioned that the pricing in the POS arrives from the central upload in Chennai (and hence the reference to this city, above) and they can not really do much about this.

Like this:

We talk about the future, and what Retail will look like in 2020 (or 2010). We talk about how supply chain needs to be optimized and how we need to get customer centric. However, even now there are some basics of Retailing that are missing in our country. Many of these also have to do with their IT implementation. This is the first in the series of posts discussing such issues, with examples.

Making a promotion flow through

This is a pretty common one, and one would think that retailers could get this right in the first shot and in a jiffy. I have noticed this many times, and surely you have too. The shelf has a designated price for an SKU and has a promotion running. You pick the item, and when checking out the POS does not seem to recognize the promotion.